How the redirection of trade routes through Russian ports have been presented in the Russian media
While the Kremlin claims to protect Belarus’s sovereignty from the West (a narrative emphasised across recent Russian coverage), a new trade agreement between Belarus and Russia highlights how Russia is securing ever more control over Belarus’s energy sector and economy. Signed on the 19th of February 2021, the intergovernmental agreement states that Belarus will begin exporting its oil via Russian ports rather than Baltic ports, as a reaction to Lithuanian sanctions.
The new trade agreement will take effect from March 2021, but negotiations between Russia and Belarus began in September 2020, when the Lithuanian sanctions were applied following the fraudulent victory of President Aleksander Lukashenko in the 2020 Belarusian presidential elections. Exiled Belarusian opposition leader Sviatlana Tsikhanouskaya was one of the voices calling on Lithuania for sanctions, along with her oppositional Coordination Council.
The sanctions prompted EuroNews to ask in September 2020 if “Lithuania was playing with fire”. Indeed, in reaction to the sanctions, Lukashenko quickly threatened to divert Belarusian cargo from Lithuania to Russia. By mid-December 2020, the Belarusian Oil Company had temporarily suspended shipment of oil via the port of Klaipeda in Lithuania.
Going forwards, the agreement will see Belarusian exports travel through the Russian port of Ust-Luga, which is approximately 300km further from Minsk than Klaipeda. Other Russian export ports will include Primorsk, Vysotsk and St. Petersburg.
The seaports and railway operators that are contracted in the new agreement are all Russian-owned. However, when Russian business broadsheet Kommersant reported the news, readers were told that “contracts with Russian operators of seaport terminals and with a railway operator, which must be signed together with the agreement are not ready”, carefully omitting the information that the railway operator is JSC Russian Railways, solely owned by the Russian government.
Similarly, another often-minimised caveat of the new agreement is that the seaports are to be paid in full even when shipments don’t hit expected quotas. Russia24 mentioned that contracts will be concluded on “a take-or-pay basis", meaning that Belarus will pay for transshipment, even if it does not use the contracted capacity reserves and does not receive the entire agreed volume. Reports also minimise the fact that it is more expensive for Belarus to ship via ports in the northwest of Russia than Baltic ports due to Belarus having to pay ice-breaker fees, as well as the fact of the greater distance of Russian ports from the target markets, will could affect the freight rate.
In other words, Belarus will take the financial hit from the agreement, yet it is a rolling contract. “The agreement was signed for three years, but in fact it is unlimited, since it provides for automatic prolongation,” Russian Transport Minister Vitaly Saveliev explained in a statement.
The agreement states that a total volume of 9.8 million mt of exports will be transported between 2021 and 2023. Estimates suggest that this covers half of Belarus’s fuel, gasoline and oil exports. However, Minsk will continue to export diesel fuel through Klaipeda for the time being, another report added.
Overall, Media IQ analysis finds that Russian media persistently pushes the message that Russia is providing friendly assistance by offering its ports for transshipment of oil products against the backdrop of the threat of European sanctions against Belarus. Yet little attention is focused on the economics of the process – specifically, how much more expensive will it be for Belarus to transport oil products through Russian ports. The wider effect of this agreement is to tie Belarus’s economy even closer to Russia’s, and narrowing the scope for Belarus to pursue economic relationships outside of those permitted by the Kremlin.